SIDE LETTER NO. 1
Execution Version
SIDE
LETTER NO. 1
THIS SIDE LETTER NO. 1, dated as of
March 16, 2021 (this “Side
Letter”), is by and between AEROCENTURY CORP., (the "Seller"), DRAKE ASSET MANAGEMENT JERSEY LIMITED
(the “Lender”)
and DRAKE JET LEASING 10 LLC
(the "Buyer ") and UMB Bank,
N.A. (not in its
individual capacity but as Agent under the Loan Agreement, the
"Agent", and together with
the Seller, the Lender and the Buyer, the "Parties").
BACKGROUND
A. MUFG
Union Bank, N.A., Umpqua Bank, Zions Bancorporation, N.A. (fka ZB,
N.A.) dba California Bank & Trust, and Columbia State Bank,
each a Lender (collectively, the “Original Lenders”), MUFG Union
Bank, N.A., as original agent (the “Original Agent”) and Seller, as
borrower, were parties to the Fourth Amended and Restated Loan and
Security Agreement dated as of May 1, 2020 (as amended, modified or
supplemented from time to time and as assigned by the Original
Lenders to Buyer as new lender and Agent, the “Loan Agreement”) pursuant to which
the Original Lenders made a loan (the “Loan”) to Seller.
B. Pursuant
to a Loan Purchase and Sale Agreement dated as of October 2, 2020,
(the “Loan Purchase
Agreement”) among the Lender, the Agent, the Original
Lenders, the Original Agent and MUFG Bank, Ltd., the Loan was sold
by the Original Lenders to the Lender and the Original Agent was
replaced with the Agent.
C. Seller
and Buyer are party to that certain membership interest purchase
agreement relating to the sale and purchase of the entire
membership interest in ACY E-175 LLC (the "Republic LLC") dated ______________ 2021
(as novated, assigned, amended, supplemented or otherwise modified
from time to time, the “MIPA”).
D. The
Parties have agreed to enter into this Side Letter to formalize
their agreement on the application of the Republic LLC Purchase
Price.
For
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, IT
IS AGREED AS FOLLOWS.
Section
1. Definitions.
(a) "Business Day" has the meaning given to
it in the Loan Agreement.
(b) "Debt Portion" means an amount equal to
the sum of:
(i) the Republic LLC
Purchase Price; less
(ii) (A)
the Retained Portion, and (B) wire transfer fees incurred for
transfers of the Republic LLC Purchase Price into the Specified
Account and for the transfer of such Debt Portion to Agent pursuant
to the terms hereof.
(c) "Deposit Account Control Agreement" has
the meaning given to it in the Loan Agreement.
(d) “Repayment Account” means the
following Dollar denominated Account of the Lender:
Account
name: Drake Asset Management Jersey Limited
Account
number: XXXXXXXX
SWIFT:
XXXXXXXX
IBAN:
XXXXXXXXX
Bank:
Bank of America N.A., London Branch, 0 Xxxx Xxxxxx Xxxxxx, Xxxxxx
XX0X 0XX.
(e) "Republic LLC Purchase Price" has the
meaning given to the term "Specified Amount" in the MIPA, being an
amount of thirteen million one hundred and eleven thousand seven
hundred and forty five United States
Dollars and forty three cents
($13,111,745.43).
(f) "Retained Portion" means an amount equal
to two million one hundred thousand Dollars
(US$2,100,000).
(g) "Secured Obligations" has the meaning
given to it in the Loan Agreement.
(h) "Specified Account" means following
Dollar denominated account of the Seller:
000
Xxxxxxxxxx Xx.
Xxx
Xxxxxxxxx, XX 00000
ABA:
XXXXXXX
SWIFT:
XXXXXXX
Account
name: AeroCentury Corp.
Account
number: XXXXXXXXX
(a) an amount equal to
the Republic LLC Purchase Price shall be paid by Buyer to the
Specified Account, pursuant to and in accordance with the terms of
article 1.2 of the MIPA;
(b) an amount of the
Republic LLC Purchase Price:
(i) that is equal to
the Debt Portion shall be applied by the Agent in and towards the
Seller's obligation to prepay a corresponding portion of the
Secured Obligations pursuant to Section 3; and
(ii) that
is equal to the Retained Portion shall be retained in the Specified
Account (and which, for the avoidance of doubt, shall remain
subject to the terms of the applicable Deposit Account Control
Agreement).
(a) Each of the Seller,
the Lender and the Agent hereby agrees that the Debt Portion is
agreed and deemed to constitute "Excess Proceeds" for the purposes
of section 6.25(b) of the Loan Agreement.
(b) The Seller
irrevocably and unconditionally undertakes that immediately upon
the occurrence of Closing (as defined in the MIPA), it shall
transfer to the Repayment Account, in full and cleared funds, an
amount equal to the Debt Portion, which upon receipt into the
Repayment Account shall be applied by the Agent to satisfy an
equivalent amount of the Seller’s corresponding prepayment
obligation and paid for value on such Business Day for the account
of the Lender.
(c) Each of the Agent
and the Lender hereby waives any requirement for notice of
prepayment that is set out in the Loan Agreement.
(d) The Seller (in its
own capacity and in its capacity as "Borrower" under the Loan
Agreement hereby instructs each of the Agent and the Lender to
apply all amounts pursuant Section 2(b) and in this Section 3 in
the manner contemplated thereby and hereby, and each of the Agent
and the Lender hereby accepts such instruction.
(a) Each of the parties
hereby represents and warrants that (i) this Side Letter has been
duly authorized and executed by it and (ii) this Side Letter
constitutes its legal, valid and binding obligations, enforceable
against it in accordance with its terms (except to the extent that
enforcement may be limited by applicable insolvency and similar
laws affecting the rights of creditors generally).
(b) THIS AGREEMENT
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS
OF LAW OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW.
(c) The provisions of
Section 7.9 of the MIPA are incorporated herein as if the same were
set out in full herein, mutatis
mutandis.
[SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto
have caused their duly authorized officers to execute and deliver
this Side Letter as of the date first above written.
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AEROCENTURY CORP. as Seller
By:
Name:
Title:
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DRAKE ASSET MANAGEMENT JERSEY LIMITED as
Lender
By:
Name:
Title:
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DRAKE JET LEASING 10 LLC as
Buyer
By:
Name:
Title:
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UMB BANK, N.A., not in its individual
capacity but solely as Agent
By:
Name:
Title:
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Signature
Page
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